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Brussels gives the green light to the new line of 10,000 million in ICO guarantees | Economy

EU flags in front of the European Commission headquarters in Brussels.
EU flags in front of the European Commission headquarters in Brussels.OLIVIER HOSLET (EFE)

The European Commission has given its approval to the aid of 10,000 million euros that the Spanish Government has designed for the activities most affected by the war in Ukraine. The support consists of a new line of ICO credit guarantees that the Executive approved in March, and the self-employed and companies affected by the conflict that need liquidity may request it.

This support is part of the anti-crisis package that the government approved at the end of March, a month after the Russian invasion of Ukraine. Of these 10,000 million, the Executive released a first tranche of 5,000 million last month, pending authorization from Brussels.

”This scheme worth 10,000 million euros will allow Spain to mitigate the economic impact of the war started by Putin in Ukraine and continue to support companies in all sectors affected by the current geopolitical crisis. We continue to support Ukraine and the Ukrainian people”, said Commissioner for Competition, Margrethe Vestager.

community rules

In a statement released this Thursday, Brussels explains that the line of 10,000 million in ICO guarantees meets the conditions of the Temporary Crisis Framework. This tool was approved at the end of March by the Commission to relax community competition rules, with the aim of allowing Member States to grant aid to their companies in the context of the war in Europe.

The Russian invasion of Ukraine is causing a severe setback for the world economy and especially Europe, which had already been knocked out by the coronavirus pandemic. The sanctions imposed on Moscow and the rise in energy prices ―already trapped in an upward spiral since last year― caused by the conflict have become a true burden for countless activities and have spread the rise in prices to the rest of the sectors. In May, inflation reached 8.9% in Spain and 8.1% in the euro zone, the highest level since the creation of the common currency.

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The temporary framework will be in force until at least the end of the year and includes a series of rules that member countries have to respect. In the case of the ICO line of guarantees, the community authorities have verified that they will be granted until December 31 and will not exceed the limit of 35,000 euros per company, in the case they are engaged in agriculture, fishing and aquaculture, and 400,000 if it is from another sector.

According to these special rules of public aid, the maturity of the guarantees cannot exceed eight years and the premiums must respect minimum levels that depend on the coverage of the guarantee and the duration of the loans. The Competition services of the European Commission have also highlighted that the new line of ICO guarantees includes a series of conditions to limit possible distortions, including safeguards that guarantee that “the advantages of the initiative are enjoyed by the final beneficiaries through through financial intermediaries.

“The Commission has reached the conclusion that the Spanish regime is necessary, adequate and proportionate to remedy a serious disturbance in the economy of a Member State,” Brussels said in its statement.

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